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Astute investors have turned their focus from the latest White House tweets to Q1 corporate profits. Strategists believe that tax benefits and pickup in deal activity will aid earnings. Wall Street has always shown an uptrend after earnings release in the last five years.

Geopolitical crises like the prospects of a Western strike on Syria and trade war tensions have receded somewhat. Mounting military tensions, historically, has had no effect on markets but on humans. In addition, Trump has toned down some of the trade war banters with China, by categorically stating that the nations may not end up imposing the proposed tariffs.

Since Q1 earnings is expected to drive equity gains and talks of firing missiles and trade war rhetoric take a back seat, investing in sound growth stocks that can make the most of the first-quarter earnings season seems judicious.

Investors Shouldn’t Fear a Syria Strike

Escalating concerns over the Middle Eastern countries have been weighing on investors’ mind for quite some time now. Trump had twitted that a missile attack on Syria was very much in the cards after Syrian President Bashar al-Assad sanctioned chemical weapon attack on civilians in Damascus over the weekend. Russia had retaliated, saying that it will fend off any U.S. missile.

Such a concern, however, ratcheted down lately after Trump suggested that a military strike on Syria may not be imminent. He tweeted “never said when an attack on Syria would take place. Could be very soon or not so soon at all!”

Investors should also shrug off fears of a U.S. missile strike on Syria. Historically, such military attacks have limited impact on the stock market, especially over the long run. Jeffrey Kleintop, the chief global investment strategist at Charles Schwab & Co, said that immediately after a military strike markets tend to lose around 0.2% to 0.3%, but there is nothing exceptional about it. Such a movement happens almost daily during normal trading sessions.

Trump Defuses Trade War Chatter with China

Trump had earlier, in the light of China’s “illicit trade practices,” doubled down on China tariffs, ratcheting up possibilities of a U.S.-China trade war. He had ordered the U.S. Trade Representative to consider imposing tariffs on additional $100 billion in Chinese imports. China in turn was widely expected to adopt a similar protectionist move and heighten global concerns of a tit-for-tat trade battle.

This had resulted in a lot of uneasiness, with most sectors expected to suffer collateral damage. After all, increased trade conflicts dent corporate profits and impede economic expansion. But, for now, Trump said that the United States may be able to avoid a potential trade conflict with China provided Beijing is willing to give more American products access to its market. Eventually, he believes that the countries will end up imposing no tariffs at all.

Q1 Earnings Takes Center Stage

While geopolitical jitters wane, investors anticipate a strong earnings season to lift Wall Street. Banks have already started to pop ahead of earnings. For the Finance sector, of which the Major Banks industry is the biggest earnings contributor, total Q1 earnings are expected to be up 19.2% from the same period last year on 4.5% higher revenues. This would follow 0.6% earnings growth in the preceding quarter on 4% higher revenues (read more: Banks Set for Blockbuster Q1 Earnings: 5 Top Picks).

Earnings are likely to rise mostly on Trump’s polices, including tax cuts. The latest tax laws gave companies massive tax relief as they will now be paying between 8% and 15.5% instead of the earlier 35% for bringing back money held overseas (read more: GOP Passes Landmark Tax Bill: Best & Worst for Stocks).

Earnings Season Mostly Leads to Big Stock Gains

Strategists from JPMorgan Chase & Co. (JPM - Free Report) and Deutsche Bank have expressed optimism, citing that share buybacks and stronger global growth will help S&P earnings surpass estimates by 5%, more than average margin of 3.1% in the past five years, per data compiled by Bloomberg.

Undeniably, this will be another big quarter for profit growth eventually leading to an uptick in share prices. After all, a whopping 80% of S&P gains came during earnings season since 2013, per Bloomberg.

5 Top Picks

Wall Street, of late, has been scaling higher on optimism that lower U.S. taxes will boost corporate profits. Conversely, investors ignored rising military tensions and trade policy that had sparked tensions for Wall Street over the past several weeks.

This calls for investing in stocks that will report a significant uptick in Q1 earnings and in the process scale north. Such stocks have a positive Earnings ESP. This is our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

These stocks also flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Style Score of A or B. This combination offers the best investment opportunities in the growth investing space.

The Zacks Consensus Estimate for its current-year earnings climbed more than 100% in the last 60 days. Axon Enterprise has an Earnings ESP of +12.50%. The company is scheduled to report earnings results for the quarter ending March on May 8.

The Zacks Consensus Estimate for its current-year earnings increased 3.1% in the last 60 days. ArcBest has an Earnings ESP of +34.48%. The company is slated to report earnings results for the quarter ending March on May 10.

Ruth's Hospitality Group, Inc. (RUTH - Free Report) , together with its subsidiaries, develops, operates, and franchises fine dining restaurants. The company has a Zacks Rank #1 and a Growth Score of A.

The Zacks Consensus Estimate for its current-year earnings climbed 11.6% in the last 60 days. Ruth's Hospitality has an Earnings ESP of +14.29%. The company is scheduled to report earnings results for the quarter ending March on May 4. You can see the complete list of today’s Zacks #1 Rank stocks here.

Comstock Resources, Inc. (CRK - Free Report) acquires, develops, explores, and produces oil and natural gas properties. The company has a Zacks Rank #2 and a Growth Score of A.

The Zacks Consensus Estimate for its current-year earnings soared more than 100% in the last 60 days. Comstock Resources has an Earnings ESP of +33.42%. The company is scheduled to report earnings results for the quarter ending March on May 14.

Vertex Energy, Inc. (VTNR - Free Report) provides a range of services designed to aggregate, process, and recycle industrial and commercial waste systems. The company has a Zacks Rank #2 and a Growth Score of B.

The Zacks Consensus Estimate for its current-year earnings jumped 28% in the last 60 days. Vertex Energy has an Earnings ESP of +33.33%. The company is scheduled to report earnings results for the quarter ending March on May 9.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

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At the center of everything we do is a strong commitment to independent research and sharing its profitable discoveries with investors. This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +25.26% per year. These returns cover a period from January 1, 1988 through December 3, 2018. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month. A simple, equally-weighted average return of all Zacks Rank stocks is calculated to determine the monthly return. The monthly returns are then compounded to arrive at the annual return. Only Zacks Rank stocks included in Zacks hypothetical portfolios at the beginning of each month are included in the return calculations. Zacks Ranks stocks can, and often do, change throughout the month. Certain Zacks Rank stocks for which no month-end price was available, pricing information was not collected, or for certain other reasons have been excluded from these return calculations.

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